Peak ripeness can be elusive.
When you buy avocados, it’s often for a specific purpose. Maybe you’re planning to have fajitas for dinner this week or make guacamole for a party. If you start worrying about whether the avocados are at the peak of their ripeness, however, you could miss the opportunity to use them for the purpose you had intended. The avocados could even start to go bad on your shelf, leaving you with less guacamole than you could have made if you’d gone ahead with your plan.
Put your goals first.
Stock options are much the same. When your company begins its path to IPO, SPAC acquisition, or direct listing and you decide to invest in it, you probably have some ideas about how you would use the additional income you anticipate. Ideally, you’ve developed a detailed financial plan that addresses goals such as funding your children’s (or grandchildren’s) education, purchasing a new home, retiring when and with the resources you desire, or supporting a favorite charity.
If you hold on to your shares longer than you had planned because you expect to price to rise further, you could miss out on the opportunity to make a big impact in your life, your family’s lives, and causes you care about. Further, if your prediction turns out to be wrong, you could end up selling your shares at a much lower price than you would have if you’d stuck to your plan.
Mark the calendar to remember to make guacamole at the right time.
If you want to make sure you remember to make guacamole before the party or fajita night, you might circle the date on the calendar or set a reminder on your phone. We often do this when we want to make sure to make time for things that we’ve decided are important and prevent them from getting crowded out by other demands on our time that invariably pop up. A financial plan serves a similar purpose.
Your financial plan helps you stay on track towards your goals.
Creating an integrated tax and financial plan is a crucial step to take when anticipating your company’s public offering. When you sit down with your financial advisor, they should first get to know your unique set of goals and priorities. This will provide the foundation they need to build a financial plan that empowers you to do what’s most important to you.
As we discussed in part 2 of this series, employees and executives are often barred from selling their shares for a period of months following public offering (the lockup period) as well as at times that they possess material non-public information about the company (blackout periods). Outlining your financial goals early in the process allows your advisor to structure a 10b5-1 trading plan that matches your vision, providing cash flow for those important life events.
Complete Wealth Management: The right mix of ingredients makes the best guacamole.
Beyond simple financial, investment, or tax advice, complete wealth management encompasses all of these. Wealth managers can create a single plan that makes the most of your investments in a variety of ways, for example,
- Scheduling trades in service of your overall financial plan
- Keeping your investments as tax efficient as possible, including active tax-loss harvesting and AMT mitigation
- Creating a charitable giving plan that supports causes you care about while also providing benefits for you
- Creating an estate plan that leaves more to your heirs